By DIANA JEAN SCHEMO

          RIO DE JANEIRO, Brazil -- Under intense pressure to reduce its spending, the Brazilian government has slashed funds toward a
          $250 million pilot project backed by seven leading industrial nations that has been the centerpiece of Brazil's efforts to save the
          Amazon rain forest.

          Environmentalists warn that without Brazil's participation, the project stands to lose almost all the donations yet to come from the Group
          of Seven industrial nations. Under the main agreement, approved at the 1992 Earth Summit here, Brazil was to provide just 10 percent of
          the $250 million.

          The pilot program pays for surveying the rain forest, and it has been the principal vehicle for marking off 40,000 square miles for
          indigenous reservations.

          Surveying what is in the vast mysterious rain forest is seen as the first step toward protecting it from destruction by ranchers, loggers,
          farmers and miners.

          The Group of Seven money was also earmarked for promoting sustainable development, controlling deforestation and other objectives.

          In addition, the money also would have helped pay for setting aside 10 percent of the rain forest, or 240,000 square miles, as national
          parks and ecologically protected areas. Amid much fanfare, Brazil's president, Fernando Henrique Cardoso, had pledged to establish the
          protected areas during a visit to New York last April.

          Covering an area half as big as the continental United States, the Amazon is a lush laboratory of plants, animals and bacteria that contains
          more than 20 percent of the world's fresh water supply.

          Throughout much of the decade, as other countries criticized Brazil for failing to protect the rain forest, the government insisted that
          wealthy nations pay to map the rain forest and to protect its resources, and it frequently contended that the scale of the program agreed to
          was insufficient to the task.

          But environmentalists say that even that modest effort is now in jeopardy. Under pressure to rein in its budget deficit, Brazilian government
          officials have slashed spending across the board. A recent agreement with the International Monetary Fund, which is spearheading a
          $41.3 billion standby loan for Brazil, reduces government spending on environmental programs by two-thirds.

          Under the pilot program, the Brazilian government provides matching funds and manpower to administer the Group of Seven grant. The
          government's revised budget, released in November, cuts the amount Brazil can expect to get from the group to $6.4 million from more
          than $61 million.

          "It is arguably a far more irrational and perverse consequence of the IMF agreement than even the harshest critics of the IMF could have
          imagined," said Stephan Schwartzman, a senior scientist at the Washington-based Environmental Defense Fund.

          The state of Acre, in western Brazil, one of the nine states covered by the rain forest, had developed a three-year program counting on
          some $5 million of the Group of Seven funds to survey and zone its forest. Ninety percent of the cost would have been underwritten by
          the group.

          "When it was all under way and ready to move forward -- boom -- the cuts came," said Maria Janet Santos, who is coordinating zoning
          for Acre's environmental protection agency. "It really cuts into the credibility of what we're trying to do."

          Paulo de Oliveira Lopes, who also works on the zoning project, said that without the Brazilian government contribution, the project would
          collapse. "Without the resources of the G-7 to carry out zoning, there's no way it can happen," he said.

          Congress is expected to vote on the budget by Jan. 15, and Sen. Marina Silva of the opposition Workers' Party said the government had
          not ruled out restoring the environmental funds if cuts could be found elsewhere.